in Guyana, Norway

Why does Norway want Guyana to build the Amaila Falls dam?

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The Amaila Falls Hydropower Project is the keystone of Guyana’s Low Carbon Development Strategy, that was launched in 2009 by then-President Bharrat Jagdeo. But the project has been on hold since August 2013, when the project developer, Blackstone Group’s Sithe Global pulled out.

Despite the uncertainty about the project, in January 2015 Norway transferred US$80 million to the Inter-American Development Bank as part of the Norwegian International Climate and Forest Initiative’s US$250 million REDD deal with Guyana. The money is intended as part-funding of the dam, the cost of which has grown over the years from US$325 million to almost US$1 billion.

Under the Norwegian government’s budget regulations, grants must be used within one year. An exception was made for the Amaila Falls project, allowing the money to remain with the IDB for eighteen months.

By mid-2016, Guyana had a new government, which opposed the construction of the Amaila Falls dam.

Development Today reported that Norway’s Ministry for Climate and Environment requested a six-month extension to allow the IDB to hold on to the money until February 2017. But the legal department in the Norwegian Agency for Development Cooperation (NORAD) turned down the request, stating that,

“the sunset date can only be extended in 2016 … In 2017, the money cannot be transferred to a new agreement but must be paid back to the Norwegian state treasury.”

The end of 2016 deadline has come and gone, but instead of the money being returned, earlier this month Development Today reported that Norway’s Ministry for Climate and Environment has extended the agreement with the IDB until December 2019. The agreement with the IDB states that the extenion was “in order to give the Parties more time to continue discussing the use of the Contribution”.

Norway’s pressure to build the Amaila Falls dam

In 2016, NORAD commissioned a review of the Amaila Falls dam. The report, carried out by the consulting firm Norconsult, concludes that,

The only realistic path for Guyana towards an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP [Amaila Falls Hydropower Project] as the first major step for substituting its current oil fired generation.

Norconsult’s take on the situation is about as far as possible from that of the government in Guyana. In August 2015, a couple of months after the new government took office, Guyana’s Minister of Finance said,

“As currently configured, it would not only be irresponsible, but a downright criminal act of deception, were we to proceed with the Amaila Falls…

“[I]t would be delusional to suggest that GPL [Guyana Power and Light Inc] has the competence to handle such a financial burden. The GPL is known to have a poor operational, financial and technical capability. The company suffers from high energy and technical losses and fuel price volatility.”

Development Today reminds us about a Norwegian visit to Guyana in August 2015 led by Per Fredrik Pharo, head of the Norwegian International Climate and Forest Initiative, and an article about the trip in the Norwegian newspaper Bergens Tidende:

Norway has continued to support the project. According to Bergens Tidende, the government in Georgetown has been frustrated over what they experience as pressure from Norway to build this dam. The following email from a central government source in Georgetown, cited by the paper, refers to a visit to Guyana in August 2015, led by Per Fredrik Pharo, head of the Norwegian Climate Forest Initiative: “The Norwegian delegation was, in my opinion, being deliberately disingenuous. Everything we know, even from instinct, tells us that the project in its present construct was/is very bad [for] Guyana.”

Norconsult signed a contract to carry out the review of the Amaila Falls dam on 20 June 2016. The report was supposed to be released on 1 September 2016, presumably to give Norway enough time to convince the Guyanese government to go ahead with the dam before the US$80 million held by the IDB had to be returned to Norway, at the end of 2016.

When the report finally came out on 12 December 2016, there was no time to convince anyone of anything. The new agreement with the IDB was signed three days after the report was published.

Meanwhile, Guyana’s government is planning a new “Green Strategy” as a replacement to Jagdeo’s Low Carbon Development Strategy. At this stage, it is not clear whether this Green Strategy will include the Amaila Falls dam.

Last week, the Guyana Times reported President David Granger as saying that, Amaila Falls was very expensive, and there were “a dozen sites” for alternative hydropower dams. Granger said,

“We are also looking at solar energy in places like the Rupununi and the Berbice Savannahs. These are huge grasslands with very high levels of sunlight. We are looking at wind along the coast and we feel that these other forms of energy should be put first and this is the advice we give to Norway that we not be pin down to a single project.”

Norway is funding deforestation

Norconsult’s report confirms that the access road to the Amaila Falls dam has led to increased deforestation:

The most serious threat to the environment that may result from the project is the access road, which is almost completed and has already, while the further progress of the project itself is uncertain, created easier access for mining and exploitation of the forest along its alignment. A strict control regime is required for obstructing such activities.

And Norconsult could find no evidence of a process of free, prior and informed consent for the communities of indigenous people living along the access road:

the degree to which local communities and key stakeholders perceive they have been involved in an inclusive and participatory process cannot be ascertained with the documentation currently available.

In June 2014, the Amerindian Peoples’ Association and the Forest Peoples Programme produced a detailed report looking at the treatment of indigenous peoples under Guyana’s Low Carbon Development Strategy. In a chapter titled, “Amaila Falls hydropower dam threatens the territory, livelihoods and forests of the Patamona people”, the report highlights a series of key issues:

  • Community consultations on the Amaila Falls Hydropower Project have so far been superficial
  • Flawed impacts assessments have downplayed indirect risks of severe negative consequences of dam development in a remote forest area
  • Access roads risk opening up Patamona lands and old growth forests to intensive logging and mining that would generate deforestation, environmental pollution and major social and cultural upheaval
  • Construction works have started without the prior agreement of affected communities
  • The project does not meet the sustainability standards of the World Commission on Dams and is not compliant with the Norway-Guyana MOU on low carbon development and REDD+
  • The Amaila Falls Hydropower project is part of the larger transnational Initiative for the Integration of the Regional Infrastructure of South America (IIRSA), which risks causing major potential impacts on indigenous peoples in Region 8 and throughout Guyana

 

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  1. Colleagues, this article speaks for itself. I have written extensively on the Amaila Falls Hydro Project. However, I do disagree with the purported view offered by Norway that the USD 80m have to return to the Norwegian Treasury based on Norwegian. Consequently, I maintain that based on the Financial Agreement covering the Guyana and Norway, the USD 80m was expected to be paid into the WORLD BANK which is the trustee. It is quite strong armed, in the part of Norway, to breach the Agreement and now say to Guyana that the USD 80m has to return to Norway if the Amaila Falls Hydro Project is no longer feasible- a project that was never approved by the GRIF Steering Committee. Because the USD80m was ‘earned payments’ it had to be now paid into the World Bank as if it never entered the IDB special account. You can read Part 3 of my Amaila Falls Hydro Project Series at Guyana Chronicle

  2. @Gary Best – Thanks for this comment.

    Here are the links to the three articles in the Guyana Chronicle about the Amaila Falls dam:

    7 January 2017: The Norconsult Report: a review for options (Part 1)

    “At the outset, it seems that the principal recommendation by the Norconsult Report on its ‘Review of the Amaila Falls Hydropower Project in Guyana’, that the “AFHP [Amaila Falls Hydropower Project] should be maintained as the first major step towards Guyana’s transition to an environmentally sustainable electricity system” was in fact a fait accompli, given that one of the terms of reference (ToR) of Norconsult provided that “The outputs of this assessment will primarily benefit the Government of Guyana by confirming the feasibility of the AFHP project.” That, to our minds, was a set determination to save the AFHP.”

    14 January 2017: Towards a Good Life in a Green Economy – The Amaila Falls Report (Part 2)

    “A good place to start would be the terms of reference (TOR) of the Norconsult consultancy. The TOR required that Norconsult delivered to the Governments of Guyana and Norway, “A report presenting possible gaps in the present project reports regarding technical, geological, hydrological and financial risks.” This is a clear indication that risks were inherent. In addition, the TOR mandated Norconsult to “… provide advice on the need for additional studies, including safeguards assessment related to IDB fiscal, transparency, fiduciary, social and environmental safeguards.” Clearly, uncertainties were anticipated. Further, the TOR required Norconsult to present an “…alternative, restructured project design regarding financing options and ownership… [with] a list of possible candidates or procedures to attract appropriate sponsors to partner with the GoG.”

    21 January 2017: The Amaila Falls Hydropower Report – Part 3

    “The Agreement also requires Norway to deposit payments earned by Guyana, in installments, into the Trustees account. We shall later review Guyana’s earned payments based on data from Norway International Climate and Forest Initiative (NICFI), the agency responsible for the payments on behalf of the KoN. In addition, the Trustee, on behalf of the KoN, shall administer the payments in accordance with the terms of the Agreement. Of particular importance is the “…recognition that deposits to the GRIF are provided for forest climate services provided by Guyana [and] Guyana shall be the beneficial owner of the amounts in the GRIF”. Whether, as beneficial owner of the funds in the GRIF, Guyana can indicate how they are used, is a question that will be answered in the next sections.”

    And here is a link to the financial agreement that you refer to in Part 3:

    Administration Agreement (Guyana REDD-Plus Investment Fund) between ROYAL NORWEGIAN MINISTRY OF FOREIGN AFFAIRS and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated October 9,2010

    Thanks again, and I look forward to reading Part 4!

  3. As someone who has spent at least 6 years working and living below the falls in the Kuribrong River, I can attest to the fact that every year there was at least several months of very little running water in the falls. I was also the person that first took Fip in. Our boats were the only means for him and his small party to acess the falls. After many conversations with him, it always struck me as nothing more than a con. A means to make money out of nothing. After seeing the studies first hand(another con)that basically were nothing more than filling jars with water and some UG students setting cameras and taking photographs 30 miles below the falls, I was even more convinced that it was a con. Norway and those who stood to make a lot of money, selling a project for their respective gains. Not one oz of benefit for Guyana